The energy sector got a lift from an 12.8 percent surge in Valero shares, after the refiner posted a better-than-expected fourth-quarter profit. The company benefited from refining greater amounts of cheap domestic crude oil during the period.

Hess shares, meanwhile, jumped on news hedge fund Elliott Management will nominate five executives to the board as is pitches a plan to break up the company to boost shareholder returns.

ING Investment Management's Douglas Cote warned that while the U.S consumer is doing okay and housing is doing fantastic, earnings are a challenge.

"Earnings right now is mainly driven by financials, financials have 40 percent growth," Cote told CNBC on Tuesday. "If you look at the nine other sectors, it's flat to negative, so I think we still have some headwinds in earnings."

Economic Outlook Ahead of the Fed

Dissecting the market's latest action ahead of the Fed's statement on Wednesday, with Barry Sternlicht, Starwood Capital Group and Charles Campbell, MKM Partners. "Treasury yields are moving higher because of good economic data," says Campbell.

Charles Campbell of MKM Partners told CNBC on Tuesday, that economic conditions in the U.S. and in emerging markets like China are improving. "Treasury yields are moving higher because of good economic data and that's consistent with the market moving higher," he said.

"The Federal Reserve statement tomorrow is likely to be the most eagerly anticipated news of the week," wrote Rebecca O'Keeffe, head of investment at Interactive Investor, in a note on Tuesday morning.

"At their last meeting they were clearly considering when to terminate QE3[the Fed's third round of monetary stimulus], so the market will be looking for any signs of this and, as with most Fed statements, trying to read between the lines."